Behind UPS's Christmas Eve Snafu - Yahoo
The bottleneck was largely in UPS's air business, which retailers leaned on heavily in the past week as they scrambled to fill down-to-the-wire orders. UPS has a bigger share of retail e-commerce business than FedEx Corp., but its smaller fleet of cargo planes might have been a limiting factor, people in the industry said. UPS said it had added 23 extra chartered aircraft to its year-round operating fleet of more than 237 planes and regular 293 daily charters. FedEx owned 581 and leased 66 as of May 31.
UPS carefully plans how it will handle the holiday peak. Extra resources such as additional cargo planes had been lined up as "hot spares"—company lingo for aircraft that could be fired up quickly in case of a logistics emergency. But it ran into a confluence of factors. Retailers have been encouraging online sales, which have grown much faster than retail sales overall. And retailers likely contributed to the logjam by offering some of their best discounts late in the season in a final push for sales. Many chains dropped prices on the final Saturday before Christmas to levels below what they were offering on Black Friday, according to Simeon Siegel, an analyst with Nomura Equity Research.
The bottleneck was largely in UPS's air business, which retailers leaned on heavily in the past week as they scrambled to fill down-to-the-wire orders. UPS has a bigger share of retail e-commerce business than FedEx Corp., but its smaller fleet of cargo planes might have been a limiting factor, people in the industry said. UPS said it had added 23 extra chartered aircraft to its year-round operating fleet of more than 237 planes and regular 293 daily charters. FedEx owned 581 and leased 66 as of May 31.
UPS carefully plans how it will handle the holiday peak. Extra resources such as additional cargo planes had been lined up as "hot spares"—company lingo for aircraft that could be fired up quickly in case of a logistics emergency. But it ran into a confluence of factors. Retailers have been encouraging online sales, which have grown much faster than retail sales overall. And retailers likely contributed to the logjam by offering some of their best discounts late in the season in a final push for sales. Many chains dropped prices on the final Saturday before Christmas to levels below what they were offering on Black Friday, according to Simeon Siegel, an analyst with Nomura Equity Research.
